When debts pile up, bankruptcy could be the answer. When it comes to domestic support issues like spousal support (or alimony) and child support, you might still be stuck with them no matter what. That does not mean, however, that bankruptcy won't affect domestic support debts. Read on to find out more.
Court Orders Supersede Bankruptcy
Child support and alimony orders are not affected by your bankruptcy filing. If you owe a monthly obligation, you must continue to make those payments throughout the bankruptcy period and beyond. If you are behind on those obligations, any negative actions taken by the courts may proceed. That can include wage garnishment, property liens, and more. Not paying child support is considered particularity serious and offenders can be jailed, lose their driver's licenses, forfeit tax returns, and more.
How Domestic Obligations Help Chapter 7 Filers
While you cannot get rid of a domestic support obligation with a filing, you can still use that obligation to assist in filing a chapter 7 bankruptcy. All filers must abide by income requirements to file. You cannot make more than the median income in your state of residence. If it's higher, you must undergo what is known as means testing. This test takes a detailed look at your budget and monthly obligations to ascertain your ability to pay your bills without filing bankruptcy. Since your domestic support obligations will remain and will continue to decrease your available means even after bankruptcy, that payment can be deducted from your income.
How Domestic Obligations May Not Help Chapter 13 Filers
Unfortunately, chapter 13 filers are not so lucky. If you not only owe money each month for child support or spousal support, but you are also in arrears, you must bring your payments up to date before you can file. Since chapter 13 is a repayment plan, it's best to begin your repayment plan without the burden of past-due child and spousal support payments. Other payments, however, like credit cards, are dealt with by becoming part of the repayment plan.
The main stumbling block when it comes to domestic support obligations is that state law stands apart from federal law, which oversees bankruptcy. Additionally, the need for support that evolves from court orders are just like that of victim restitution and court fees—they are important enough to be paid regardless of a bankruptcy filing. To find out more about dealing with support obligations and bankruptcy, speak to a lawyer.